Mortgage Rates Update: September 25th, 2025
- Bill Knudson
- Sep 27
- 1 min read
This week’s mortgage market reflected a modest uptick in borrowing costs, with spreads narrowing slightly as Treasury yields moved higher. Economist Bill Knudson emphasizes that while the increase in rates is small, spreads remain well above historic norms, signaling lender caution.
For a $100,000 loan at 6.30%, the monthly payment increased $3 to $619.
Upcoming releases:
Next new jobs Oct 3 (9.5.25 New jobs 22k, unemployment rose to 4.3%)
Next CPI release is Oct 15 (CPI increased from 2.7% to 2.9%)
Next Fed meeting is Oct 29 (The Fed decreased rates 25bp on Sept 17)
Key Developments
Mortgage Rates Increased:
The 30-year fixed mortgage rate rose 4 basis points (bp) to 6.30%.
On a $100,000 loan, the monthly payment climbed $3 to $619.
Affordability Profile:
Net interest expense: $368/month, or about 59% of the total payment.
Income required to qualify: $26,527, based on a 3.8x multiplier.
Spread and Market Context:
The spread between the 30-year mortgage and the 10-year Treasury narrowed by 3bp to 212bp.
This remains 44bp above the long-run historical average of 168bp, leaving a sizeable safety cushion for lenders.
The 10-year Treasury yield increased 7bp to 4.18%.
Knudson’s Perspective
Knudson interprets the week’s developments as consistent with a cautious lending environment. While spreads are narrowing, they remain elevated, underscoring the risk premiums lenders continue to build in. He expects that moderation in inflation toward the 2.5%–3% range will eventually bring spreads closer to historical norms, improving affordability for borrowers. For now, modest increases in borrowing costs reflect lenders balancing stability with caution.
Comments